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Chemical Financial Corporation Reports First Quarter 2013 Results

MIDLAND, Mich., April 15, 2013 (GLOBE NEWSWIRE) -- Chemical Financial Corporation (Nasdaq:CHFC) today announced 2013 first quarter net income of $13.2 million, or $0.48 per diluted share, compared to 2012 fourth quarter net income of $11.7 million, or $0.42 per diluted share, and 2012 first quarter net income of $12.4 million, or $0.45 per diluted share.

"Despite economic conditions that can best be described as tepid, we continue to post strong earnings growth as a result of the combination of lower credit-related costs and higher organic balance sheet growth," noted David B. Ramaker, Chairman, Chief Executive Officer and President of the Corporation. "While asset quality and loan loss metric improvements are expected to continue, we will increasingly look to the combination of asset growth and cost controls to drive future earnings growth. We are confident that our community-focused, relationship-oriented approach and strong financial condition will continue to make Chemical Bank the financial institution of choice for the businesses and residents in the Michigan markets we serve."

Net income of $13.2 million in the first quarter of 2013 was $1.5 million, or 13.5%, higher than the fourth quarter of 2012 largely due to a $2.0 million reduction in the provision for loan losses, which was driven by the continued improvement in the credit quality of the loan portfolio. Noninterest income increased in the first quarter of 2013 over the fourth quarter of 2012. Operating expenses were the same in both quarters. Higher operating expenses in the first quarter of 2013, largely attributable to the 21 branch banking offices acquired in December 2012 (branch acquisition transaction), were offset by lower performance-based compensation expense and the absence of acquisition-related expenses ($1.8 million incurred in the fourth quarter of 2012).

Net income in the first quarter of 2013 was $0.8 million, or 7.0%, higher than the first quarter of 2012, largely due to a reduction in the provision for loan losses of $2.0 million. The Corporation also recognized an increase of $1.5 million in net interest income and significant growth in noninterest income in the first quarter of 2013 over the first quarter of 2012. These increases were offset by higher operating costs in the first quarter of 2013, largely attributable to the branch acquisition transaction.

The Corporation's return on average assets was 0.91% during the first quarter of 2013, compared to 0.83% in the fourth quarter of 2012 and 0.92% in the first quarter of 2012. The Corporation's return on average shareholders' equity was 9.0% in the first quarter of 2013, compared to 7.7% in the fourth quarter of 2012 and 8.7% in the first quarter of 2012.

The net interest margin (on a tax-equivalent basis) was 3.54% in the first quarter of 2013, compared to 3.74% in the fourth quarter of 2012 and 3.76% in the first quarter of 2012. The decrease in the net interest margin in the first quarter of 2013 was primarily attributable to the branch acquisition transaction, in which the Corporation acquired $340 million in cash and $44 million in loans. The Corporation invested the cash acquired in the branch acquisition transaction in short-term investment securities and intends to deploy these assets into loans by growing its market share in the new markets.

Net interest income was $47.7 million in the first quarter of 2013, $0.3 million lower than the fourth quarter of 2012, although $1.5 million higher than the first quarter of 2012. The increase in net interest income in the first quarter of 2013 over the first quarter of 2012 resulted largely from the branch acquisition transaction. The increase in net interest income attributable to loan growth was largely offset by the net unfavorable impact of interest-earning assets and interest-bearing liabilities repricing during the twelve months ended March 31, 2013.

The provision for loan losses (provision) was $3.0 million in the first quarter of 2013, compared to $5.0 million in both the fourth quarter of 2012 and the first quarter of 2012. Net loan charge-offs were $4.7 million in the first quarter of 2013, compared to $5.2 million in the fourth quarter of 2012 and $5.5 million in the first quarter of 2012.

Noninterest income was $16.2 million in the first quarter of 2013, compared to $14.7 million in the fourth quarter of 2012 and $13.3 million in the first quarter of 2012. Noninterest income in the first quarter of 2013 included $0.8 million of investment securities gains that were attributable to the Corporation's sales of $32 million of available-for-sale investment securities. The proceeds from the sales of the investment securities were used to prepay all of the Corporation's Federal Home Loan Bank (FHLB) advances totaling $34.3 million. The Corporation incurred prepayment fees of $0.8 million in conjunction with the prepayment of the FHLB advances, with these prepayment fees included in other operating expenses. Net interest income for the remainder of 2013 will be positively impacted by the prepayment of the FHLB advances. During the first quarter of 2012, the Corporation recognized a gain of $1.3 million in noninterest income on the sale of its merchant card servicing business. Excluding the gains from the sales of the investment securities and merchant card servicing business (non-recurring gains), noninterest income in the first quarter of 2013 was $0.7 million higher than the fourth quarter of 2012 and $3.4 million higher than the first quarter of 2012.

The increase in noninterest income of $0.7 million in the first quarter of 2013 (excluding non-recurring gains) over the fourth quarter of 2012 was primarily driven by an increase in revenue generated from customers' debit card usage of $0.7 million and an increase in wealth management revenue of $0.5 million. The increase in debit card revenue was partially attributable to the branch acquisition transaction. These increases were partially offset by a decrease in mortgage banking revenue of $0.5 million.

The increase in noninterest income of $3.4 million in the first quarter of 2013 over the first quarter of 2012 (excluding non-recurring gains) was attributable to increases across all major categories of noninterest income and was driven by growth in the volume of services provided and additional fees/revenue earned as a result of the branch acquisition transaction. Revenue generated from customers' debit card usage was $1.0 million higher, mortgage banking revenue was $0.8 million higher, service charges and fees on deposit accounts were $0.7 million higher and wealth management revenue was $0.5 million higher.

Operating expenses were $42.0 million in both the first quarter of 2013 and fourth quarter of 2012, compared to $37.0 million in the first quarter of 2012. As previously discussed, operating expenses in the first quarter of 2013 included $0.8 million of prepayment fees incurred to prepay the Corporation's FHLB advances. Operating expenses in the fourth quarter of 2012 included acquisition-related transaction expenses of $1.8 million. Excluding the prepayment fees and acquisition-related transaction expenses (non-recurring expenses), operating expenses in the first quarter of 2013 were $1.0 million higher than the fourth quarter of 2012 and $4.2 million higher than the first quarter of 2012.

The $1.0 million increase in operating expenses in the first quarter of 2013 over the fourth quarter of 2012 (excluding non-recurring expenses) was primarily attributable to incremental operating costs associated with the branch acquisition transaction. The incremental operating costs were partially offset by lower credit-related expenses and performance-based compensation. Credit-related expenses, comprised of loan collection costs and other real estate (ORE) net costs, of $1.0 million in the first quarter of 2013 were $0.2 million lower than the fourth quarter of 2012. Performance-based compensation expense of $1.3 million in the first quarter of 2013 was $1.1 million lower than the fourth quarter of 2012.

The $4.2 million increase in operating expenses in the first quarter of 2013 (excluding non-recurring expenses) over the first quarter of 2012 was primarily attributable to incremental operating costs associated with the branch acquisition transaction and a combination of merit and market-driven compensation increases provided to the Corporation's employees effective January 1, 2013.

The Corporation's efficiency ratio was 64.4% in the first quarter of 2013, 63.0% in the fourth quarter of 2012 and 62.1% in the first quarter of 2012.

Total assets were $5.99 billion at March 31, 2013, up from $5.92 billion at December 31, 2012 and $5.45 billion at March 31, 2012. The increase in total assets during the twelve months ended March 31, 2013 was primarily attributable to the branch acquisition transaction that added $404 million in assets on the acquisition date. The Corporation has maintained significant amounts of funds at the Federal Reserve Bank (FRB), with $477 million in balances held at the FRB at March 31, 2013, compared to $514 million at December 31, 2012 and $353 million at March 31, 2012.

Total loans were $4.19 billion at March 31, 2013, up from $4.17 billion at December 31, 2012 and $3.84 billion at March 31, 2012. During the three and twelve months ended March 31, 2013, total loans increased $17.5 million, or 0.4%, and $342 million, or 8.9%, respectively. The increase in loans during the twelve months ended March 31, 2013 was attributable to a combination of improving economic conditions, increased market share, and the acquisition of $44 million of loans in the branch acquisition transaction. The average yield on the loan portfolio was 4.69% in the first quarter of 2013, compared to 4.79% in the fourth quarter of 2012 and 5.10% in the first quarter of 2012.

Investment securities were $961 million at March 31, 2013, compared to $817 million at December 31, 2012 and $867 million at March 31, 2012. The average yield of the investment securities portfolio was 2.19% in the first quarter of 2013, compared to 2.21% in the fourth quarter of 2012 and 2.28% in the first quarter of 2012.

Total deposits were $5.01 billion at March 31, 2013, up from $4.92 billion at December 31, 2012 and $4.46 billion at March 31, 2012. The Corporation experienced an increase in total deposits of $546 million, or 12.2%, during the twelve months ended March 31, 2013, with the increase largely attributable to the branch acquisition transaction. The Corporation acquired $404 million of deposits on the date of acquisition. Remaining brokered deposits acquired in the Corporation's 2010 acquisition of Byron Bank were $44 million at March 31, 2013, compared to $62 million at December 31, 2012 and $94 million at March 31, 2012. The repricing of matured customer certificates of deposit and the decrease in interest rates on various interest-bearing deposit accounts to reflect lower market interest rates resulted in the Corporation's average cost of funds declining to 0.36% in the first quarter of 2013 from 0.41% in the fourth quarter of 2012 and 0.54% in the first quarter of 2012.

During the first quarter of 2013, the Corporation paid off all of its FHLB advances outstanding. FHLB advances totaled $34.3 million at December 31, 2012 and $42.1 million at March 31, 2012.

At March 31, 2013, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were 8.1% and 13.3%, respectively, compared to 8.1% and 13.2%, respectively, at December 31, 2012 and 8.7% and 13.7%, respectively, at March 31, 2012. The decreases in the Corporation's equity ratios from March 31, 2012 to March 31, 2013 were attributable to an increase in average assets that resulted from the branch acquisition transaction.

At March 31, 2013, the Corporation's book value was $21.97 per share, compared to $21.69 per share at December 31, 2012 and $21.10 per share at March 31, 2012. At March 31, 2013, the Corporation's tangible book value was $17.34 per share, compared to $17.03 per share at December 31, 2012 and $16.84 per share at March 31, 2012.

The credit quality of the Corporation's loan portfolio continued to show improvement during the first quarter of 2013. The Corporation's nonperforming loans, consisting of nonaccrual loans, accruing loans past due 90 days or more as to principal or interest payments and nonperforming troubled debt restructurings, totaled $86.4 million at March 31, 2013, compared to $90.9 million at December 31, 2012 and $98.5 million at March 31, 2012. At March 31, 2013, nonperforming loans as a percentage of total loans were 2.06%, compared to 2.18% at December 31, 2012 and 2.56% at March 31, 2012.

Other real estate and repossessed assets totaled $18.2 million at March 31, 2013, compared to $18.5 million at December 31, 2012 and $25.9 million at March 31, 2012.

At March 31, 2013, the allowance for loan losses of the originated loan portfolio was $82.3 million, or 2.16% of originated loans, compared to $84.0 million, or 2.22% of originated loans, at December 31, 2012 and $85.6 million, or 2.54% of originated loans, at March 31, 2012. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 95% at March 31, 2013, compared to 92% at December 31, 2012 and 87% at March 31, 2012. The allowance for loan losses of the acquired loan portfolio was $0.5 million at both March 31, 2013 and December 31, 2012, compared to $2.2 million at March 31, 2012. Management believes that the Corporation's acquired loan portfolio totaling $374 million at March 31, 2013 was performing, overall, at or slightly better than original expectations.

Chemical Financial Corporation is the second largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through a single subsidiary bank, Chemical Bank, with 156 banking offices spread over 38 counties in the lower peninsula of Michigan. At March 31, 2013, the Corporation had total assets of $6.0 billion. Chemical Financial Corporation's common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issues comprising The NASDAQ Global Select Market. More information about the Corporation is available by visiting the investor relations section of its website at www.chemicalbankmi.com.

Forward-Looking Statements

This press release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and Chemical Financial Corporation (Corporation). Words such as "anticipates," "believes," "confident," "continue," "estimates," "expects," "focus," "forecasts," "intends," "is likely," "judgment," "opinion," "opportunities," "plans," "predicts," "projects," "should," "trend," "will," and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to future levels of loan charge-offs, future levels of provisions for loan losses, real estate valuation, future levels of nonperforming assets, the rate of asset dispositions, future capital levels, future dividends, future growth and funding sources, future liquidity levels, future profitability levels, the effects on earnings of future changes in interest rates, the future level of other revenue sources, future economic trends and conditions, future initiatives to expand the Corporation's market share, expected cash flows from acquired loans, future effects of new or changed accounting standards, future opportunities for acquisitions, the impact of branch acquisition transactions on the Corporation's business, opportunities to increase top line revenues, the Corporation's ability to grow its core franchise, and future cost savings. All statements referencing future time periods are forward-looking. Management's determination of the provision and allowance for loan losses; the carrying value of acquired loans, goodwill and mortgage servicing rights; the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment); and management's assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. The future effect of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on the Corporation, specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Risk factors include, but are not limited to, the risk factors described in Item 1A of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2012. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

Chemical Financial Corporation Announces First Quarter Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation
March 31 December 31 March 31
2013 2012 2012
(In thousands, except per share data)
Assets
Cash and cash equivalents:
Cash and cash due from banks $ 101,501 $ 142,467 $ 120,435
Interest-bearing deposits with the Federal Reserve Bank 477,225 513,668 353,243
Total cash and cash equivalents 578,726 656,135 473,678
Investment securities:
Available-for-sale 703,622 586,809 676,007
Held-to-maturity 257,749 229,977 191,297
Total investment securities 961,371 816,786 867,304
Loans held-for-sale 14,850 17,665 25,080
Loans:
Commercial 1,038,115 1,002,722 903,935
Commercial real estate 1,162,383 1,161,861 1,095,793
Real estate construction and land development 98,007 100,237 101,157
Residential mortgage 872,454 883,835 861,301
Consumer installment and home equity 1,014,302 1,019,080 880,912
Total loans 4,185,261 4,167,735 3,843,098
Allowance for loan losses (82,834) (84,491) (87,785)
Net loans 4,102,427 4,083,244 3,755,313
Premises and equipment 73,501 75,458 66,661
Goodwill 120,164 120,164 113,414
Other intangible assets 14,902 15,388 10,939
Interest receivable and other assets 124,587 132,412 139,130
Total Assets $ 5,990,528 $ 5,917,252 $ 5,451,519
Liabilities
Deposits:
Noninterest-bearing $ 1,086,986 $ 1,085,857 $ 914,523
Interest-bearing 3,920,372 3,835,586 3,546,861
Total deposits 5,007,358 4,921,443 4,461,384
Interest payable and other liabilities 30,931 54,716 32,809
Short-term borrowings 347,484 310,463 335,082
Federal Home Loan Bank (FHLB) advances -- 34,289 42,120
Total liabilities 5,385,773 5,320,911 4,871,395
Shareholders' Equity:
Preferred stock, no par value per share -- -- --
Common stock, $1 par value per share 27,532 27,499 27,491
Additional paid-in capital 433,648 433,195 431,549
Retained earnings 174,209 166,766 145,195
Accumulated other comprehensive loss (30,634) (31,119) (24,111)
Total shareholders' equity 604,755 596,341 580,124
Total Liabilities and Shareholders' Equity $ 5,990,528 $ 5,917,252 $ 5,451,519
Chemical Financial Corporation Announces First Quarter Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation
Three Months Ended
March 31
2013 2012
(In thousands, except per share data)
Interest Income
Interest and fees on loans $ 47,905 $ 48,256
Interest on investment securities:
Taxable 2,438 2,565
Tax-exempt 1,564 1,485
Dividends on nonmarketable equity securities 151 130
Interest on deposits with the Federal Reserve Bank 321 228
Total Interest Income 52,379 52,664
Interest Expense
Interest on deposits 4,566 6,102
Interest on short-term borrowings 114 104
Interest on Federal Home Loan Bank advances 47 263
Total Interest Expense 4,727 6,469
Net Interest Income 47,652 46,195
Provision for loan losses 3,000 5,000
Net Interest Income after Provision for Loan Losses 44,652 41,195
Noninterest Income
Service charges and fees on deposit accounts 5,195 4,505
Wealth management revenue 3,445 2,921
Other charges and fees for customer services 4,651 3,365
Mortgage banking revenue 2,012 1,185
Gain on sale of investment securities 847 --
Gain on sale of merchant card services -- 1,280
Other 89 69
Total Noninterest Income 16,239 13,325
Operating Expenses
Salaries, wages and employee benefits 23,369 20,569
Occupancy 3,663 3,154
Equipment and software 3,450 3,118
Other 11,475 10,130
Total Operating Expenses 41,957 36,971
Income Before Income Taxes 18,934 17,549
Federal income tax expense 5,700 5,175
Net Income $ 13,234 $ 12,374
Net income per common share:
Basic $ 0.48 $ 0.45
Diluted 0.48 0.45
Key Ratios:
Return on average assets 0.91% 0.92%
Return on average shareholders' equity 9.0% 8.7%
Net interest margin 3.54% 3.76%
Efficiency ratio 64.4% 62.1%
Chemical Financial Corporation Announces First Quarter Operating Results
Financial Summary (Unaudited)
Chemical Financial Corporation
Three Months Ended
March 31 Dec 31 Sept 30 June 30 March 31
2013 2012 2012 2012 2012
(Dollars in thousands)
Average Balances
Total assets $ 5,924,820 $ 5,576,422 $ 5,433,491 $ 5,360,598 $ 5,396,420
Total interest-earning assets 5,579,789 5,251,531 5,105,101 5,044,629 5,061,882
Total loans 4,152,570 4,077,918 3,987,928 3,901,321 3,824,604
Total deposits 4,950,956 4,590,370 4,464,582 4,383,628 4,416,273
Total interest-bearing liabilities 4,221,638 3,926,582 3,823,954 3,817,753 3,903,986
Total shareholders' equity 599,406 600,794 591,683 582,873 574,261
Key Ratios (annualized where applicable)
Net interest margin (taxable equivalent basis) 3.54% 3.74% 3.76% 3.80% 3.76%
Efficiency ratio 64.4% 63.0% 59.3% 58.7% 62.1%
Return on average assets 0.91% 0.83% 0.96% 1.04% 0.92%
Return on average shareholders' equity 9.0% 7.7% 8.8% 9.6% 8.7%
Average shareholders' equity as a percent of average assets 10.1% 10.8% 10.9% 10.9% 10.6%
Capital ratios (period end):
Tangible shareholders' equity as a percent of total assets 8.1% 8.1% 8.8% 9.0% 8.7%
Total risk-based capital ratio 13.3% 13.2% 13.6% 13.6% 13.7%
March 31 Dec 31 Sept 30 June 30 March 31
2013 2012 2012 2012 2012
Credit Quality Statistics
Originated Loans $ 3,810,989 $ 3,775,140 $ 3,606,547 $ 3,515,110 $ 3,370,279
Acquired Loans 374,272 392,595 412,612 447,232 472,819
Nonperforming Assets:
Nonperforming loans 86,417 90,854 90,877 92,811 98,548
Other real estate and repossessed assets (ORE) 18,194 18,469 19,467 23,509 25,944
Total nonperforming assets 104,611 109,323 110,344 116,320 124,492
Performing troubled debt restructurings 30,723 31,369 30,406 26,383 27,177
Allowance for loan losses-originated as a percent of:
Total originated loans 2.16% 2.22% 2.33% 2.40% 2.54%
Nonperforming loans 95% 92% 93% 91% 87%
Nonperforming loans as a percent of total loans 2.06% 2.18% 2.26% 2.34% 2.56%
Nonperforming assets as a percent of:
Total loans plus ORE 2.49% 2.61% 2.73% 2.92% 3.22%
Total assets 1.75% 1.85% 1.98% 2.17% 2.28%
Net loan charge-offs (year-to-date):
Originated 4,657 20,142 14,939 10,622 5,548
Acquired -- 2,200 2,200 -- --
Total loan charge-offs (year-to-date) 4,657 22,342 17,139 10,622 5,548
Net loan charge-offs as a percent of average loans (year-to-date, annualized) 0.45% 0.57% 0.59% 0.55% 0.58%
March 31 Dec 31 Sept 30 June 30 March 31
2013 2012 2012 2012 2012
Additional Data - Intangibles
Goodwill $ 120,164 $ 120,164 $ 113,414 $ 113,414 $ 113,414
Core deposit intangibles 11,417 11,910 6,777 7,144 7,512
Mortgage servicing rights (MSR) 3,485 3,478 3,466 3,463 3,427
Amortization of core deposit intangibles (quarter only) 493 467 367 368 367
Chemical Financial Corporation Announces First Quarter Operating Results
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)*
Three Months Ended March 31, 2013
Tax
Average Equivalent Effective
Balance Interest Yield/Rate
Assets (Dollars in thousands)
Interest-earning assets:
Loans** $ 4,167,614 $ 48,361 4.69%
Taxable investment securities 666,809 2,438 1.46
Tax-exempt investment securities 215,727 2,388 4.43
Other interest-earning assets 25,572 151 2.39
Interest-bearing deposits with the Federal Reserve Bank 504,067 321 0.26
Total interest-earning assets 5,579,789 53,659 3.89
Less: allowance for loan losses 84,978
Other Assets:
Cash and cash due from banks 117,620
Premises and equipment 74,608
Interest receivable and other assets 237,781
Total assets $ 5,924,820
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits $ 1,102,386 $ 252 0.09%
Savings deposits 1,337,415 296 0.09
Time deposits 1,451,681 4,018 1.12
Short-term borrowings 322,308 114 0.14
FHLB advances 7,848 47 2.43
Total interest-bearing liabilities 4,221,638 4,727 0.45
Noninterest-bearing deposits 1,059,474 -- --
Total deposits and borrowed funds 5,281,112 4,727 0.36
Interest payable and other liabilities 44,302
Shareholders' equity 599,406
Total liabilities and shareholders' equity $ 5,924,820
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) 3.44%
Net Interest Income (FTE) $ 48,932
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) 3.54%
* Taxable equivalent basis using a federal income tax rate of 35%.
** Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields.
Also, tax equivalent interest includes net loan fees.
Chemical Financial Corporation Announces First Quarter Operating Results
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
March 31 Dec 31 Sept 30 June 30 March 31
2013 2012 2012 2012 2012
(Dollars in thousands)
Nonperforming Loans:
Nonaccrual loans:
Commercial $ 12,186 $ 14,601 $ 15,217 $ 12,673 $ 11,443
Commercial real estate 35,849 37,660 41,311 41,691 46,870
Real estate construction and land development 4,273 5,401 6,664 3,485 3,809
Residential mortgage 10,407 10,164 11,307 12,613 12,687
Consumer installment and home equity 3,536 3,472 3,825 3,994 4,344
Total nonaccrual loans 66,251 71,298 78,324 74,456 79,153
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial 4 -- 273 300 1,005
Commercial real estate 177 87 247 269 75
Real estate construction and land development -- -- -- -- --
Residential mortgage 196 1,503 431 840 333
Consumer installment and home equity 874 769 1,147 1,157 1,233
Total accruing loans contractually past due 90 days or more as to interest or principal payments 1,251 2,359 2,098 2,566 2,646
Nonperforming troubled debt restructurings:
Commercial loan portfolio 14,587 13,876 6,553 11,691 11,258
Consumer loan portfolio 4,328 3,321 3,902 4,098 5,491
Total nonperforming troubled debt restructurings 18,915 17,197 10,455 15,789 16,749
Total nonperforming loans 86,417 90,854 90,877 92,811 98,548
Other real estate and repossessed assets 18,194 18,469 19,467 23,509 25,944
Total nonperforming assets $ 104,611 $ 109,323 $ 110,344 $ 116,320 $ 124,492
Chemical Financial Corporation Announces First Quarter Operating Results
Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation
Three Months Ended
March 31 Dec 31 Sept 30 June 30 March 31
2013 2012 2012 2012 2012
(Dollars in thousands)
Allowance for loan losses - originated loan portfolio
Allowance for loan losses - originated, at beginning of period $ 83,991 $ 84,194 $ 84,511 $ 85,585 $ 86,733
Provision for loan losses - originated 3,000 5,000 4,000 4,000 4,400
Loans charged off:
Commercial (1,359) (1,623) (551) (974) (1,079)
Commercial real estate (2,060) (1,532) (1,952) (2,178) (2,268)
Real estate construction and land development (97) (1,238) (51) (45) (32)
Residential mortgage (734) (1,224) (1,357) (1,140) (1,717)
Consumer installment and home equity (1,224) (1,504) (1,485) (1,835) (1,451)
Total loan charge-offs (5,474) (7,121) (5,396) (6,172) (6,547)
Recoveries of loans previously charged off:
Commercial 160 278 135 140 191
Commercial real estate 50 1,202 325 298 421
Real estate construction and land development 1 -- -- -- 2
Residential mortgage 161 104 237 199 22
Consumer installment and home equity 445 334 382 461 363
Total loan recoveries 817 1,918 1,079 1,098 999
Net loan charge-offs - originated (4,657) (5,203) (4,317) (5,074) (5,548)
Allowance for loan losses - originated, at end of period 82,334 83,991 84,194 84,511 85,585
Allowance for loan losses - acquired loan portfolio
Allowance for loan losses - acquired, at beginning of period 500 500 2,200 2,200 1,600
Provision for loan losses - acquired -- -- 500 -- 600
Net loan charge-offs - acquired (commercial) -- -- (2,200) -- --
Allowance for loan losses - acquired, at end of period 500 500 500 2,200 2,200
Total allowance for loan losses $ 82,834 $ 84,491 $ 84,694 $ 86,711 $ 87,785
Chemical Financial Corporation Announces First Quarter Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
2013 2012 2012 2012 2012
(Dollars in thousands, except per share data)
Summary of Operations
Interest income $ 52,379 $ 53,126 $ 52,501 $ 52,467 $ 52,664
Interest expense 4,727 5,132 5,591 6,021 6,469
Net interest income 47,652 47,994 46,910 46,446 46,195
Provision for loan losses 3,000 5,000 4,500 4,000 5,000
Net interest income after provision for loan losses 44,652 42,994 42,410 42,446 41,195
Noninterest income 16,239 14,676 12,719 13,944 13,325
Operating expenses 41,957 42,008 36,723 36,199 36,971
Income before income taxes 18,934 15,662 18,406 20,191 17,549
Federal income tax expense 5,700 4,000 5,300 6,325 5,175
Net income $ 13,234 $ 11,662 $ 13,106 $ 13,866 $ 12,374
Net interest margin 3.54% 3.74% 3.76% 3.80% 3.76%
Per Common Share Data
Net income:
Basic $ 0.48 $ 0.42 $ 0.48 $ 0.50 $ 0.45
Diluted 0.48 0.42 0.48 0.50 0.45
Cash dividends declared 0.21 0.21 0.21 0.20 0.20
Book value - period-end 21.97 21.69 21.75 21.42 21.10
Tangible book value - period-end 17.34 17.03 17.52 17.17 16.84
Market value - period-end 26.38 23.76 24.20 21.50 23.44

CONTACT: David B. Ramaker, CEO Lori A. Gwizdala, CFO 989-839-5350Source:Chemical Financial Corporation